The rating also reflects Hongqiao's vertically integrated business model, which has resulted in strong profitability and high utilization compared with those of its domestic peers.On the other hand, Hongqiao's rating is constrained by the cyclicality of the aluminum industry, regulatory risks and its concentrated ownership, historically aggressive expansion and frequent change of auditors.Hongqiao's business has been resilient in 2020 despite tough operating conditions due to the pandemic. Revenue rose 2.3% in 2020 to RMB86.1 billion, adjusted gross profit margin increased to 31.2% in 2020 from 28.4% in 2019, and leverage, measured by adjusted debt to EBITDA, declined to 3.2x in 2020, compared with 3.7x in 2019.The company has also managed its refinancing through an equity placement, convertible bond issuance and redemption of its onshore bond using internal resources.Moody's believes that Hongqiao has structurally improved its capital structure through bond redemptions and debt reduction.
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of China Hongqiao Group Limited and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
Tesla is ordering giant aluminium casting presses for its assembly line in Germany. Indeed, aluminium is going to be one of the metals critical to the unfolding green revolution, not just for its role in transport but also for its use in renewable energy sources, particularly solar panels. The race to produce low carbon aluminium is now on as producers look to differentiate their product in a shifting consumer landscape.